Recurring Measurements

The following table presents the fair value measurements of assets recognized in the accompanying condensed consolidated balance sheets measured at fair value on a recurring basis and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2023 and June 30, 2022:


			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2023:
Available-for-sale securities:
US Treasury	$	1,442	$	—	$	1,442	$	—
US Government and federal agency		6,539		—		6,539		—
Mortgage-backed securities – GSE residential		180,219		—		180,219		—
Small Business Administration		16,062		—		16,062		—
State and political subdivisions		3,431		—		1,070		2,361

Mortgage servicing rights		1,472		—		—		1,472


			Fair Value Measurements Using
	Fair Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2022:
Available-for-sale securities:
US Treasury	$	3,400	$	—	$	3,400	$	—
US Government and federal agency		9,121		—		9,121		—
Mortgage-backed securities – GSE residential		188,185		—		188,185		—
Small Business Administration		16,442		—		16,442		—
State and political subdivisions		3,758		—		1,096		2,662

Mortgage servicing rights		1,463		—		—		1,463

Following is a description of the valuation methodologies and inputs used for assets measured at fair value on a recurring basis and recognized in the accompanying condensed consolidated balance sheets, as well as the general classification of such assets pursuant to the valuation hierarchy. There have been no significant changes in the valuation techniques during the period ended March 31, 2023. For assets classified within Level 3 of the fair value hierarchy, the process used to develop the reported fair value is described below.

Available-for-Sale

Securities

Where quoted market prices are available in an active market, securities are classified within Level 1 of the valuation hierarchy. There were no Level 1 securities as of March 31, 2023 or June 30, 2022. If quoted market prices are not

available, then fair values are estimated by using pricing models, quoted prices of securities with similar characteristics or discounted cash flows. For these investments, the inputs used by the pricing service to determine fair value may include one, or a combination of, observable inputs such as benchmark yields, reported trades, broker/dealer quotes, issuer spreads,

two-sided

markets, benchmark securities, bid, offers and reference data market research publications and are classified within Level 2 of the valuation hierarchy. Level 2 securities include U.S. Government and federal agency, mortgage-backed securities (GSE - residential) and state and political subdivisions. In certain cases where Level 1 or Level 2 inputs are not available, securities are classified within Level 3 of the hierarchy.

Mortgage Servicing Rights

Mortgage servicing rights do not trade in an active, open market with readily observable prices. Accordingly, fair value is estimated using discounted cash flow models. Due to the nature of the valuation inputs, mortgage servicing rights are classified within Level 3 of the hierarchy.

Level 3 Reconciliation

The following is a reconciliation of the beginning and ending balances of recurring fair value measurements recognized in the accompanying balance sheet using significant unobservable (Level 3) inputs:


	State and Political Subdivisions

Balance, July 1, 2022	$	2,662

Transfers into Level 3		—
Transfers out of Level 3		—
Total realized and unrealized gains and losses included in net income		—
Purchases		—
Sales		—
Settlements		(301	)

Balance, March 31, 2023	$	2,361

Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date	$	—


	Mortgage Servicing Rights
Balance, July 1, 2022	$	1,463

Total realized and unrealized gains and losses included in net income		82
Servicing rights that result from asset transfers		60
Payments received and loans refinanced		(133	)

Balance, March 31, 2023	$	1,472

Total gains or losses for the period included in net income attributable to the change in unrealized gains or losses related to assets and liabilities still held at the reporting date	$	82

Realized and unrealized gains and losses for items reflected in the table above are included in net income in the consolidated statements of income as noninterest income.

Unobservable (Level 3) Inputs

The following tables present quantitative information about unobservable inputs used in recurring and nonrecurring Level 3 fair value measurements at March 31, 2023 and June 30, 2022.

Fair Value at
March 31, 2023

Valuation Technique

Unobservable Inputs

Range (Weighted
Average)

Mortgage servicing rights

1,472

Discounted cash flow

Discount rate

Constant prepayment rate

Probability of default

9.5% (9.5%)

6.0% - 6.8% (6.6%)

0.10% - 0.14% (0.12%)

State and political subdivisions

2,361

Discounted cash flow

Maturity/Call Date

1 month – 9 years

Weighted average coupon

2.97% - 3.08% (3.03%)

Marketability yield
adjustment

1.0% - 2.0% (1.6%)

Fair Value at
June 30, 2022

Valuation Technique

Unobservable Inputs

Range (Weighted
Average)

Mortgage servicing rights

1,463

Discounted cash flow

Discount rate

Constant prepayment rate

Probability of default

9.5% (9.5%)

6.0% - 6.7% (6.7%)

0.10% - 0.14% (0.12%)

State and political subdivisions

2,662

Discounted cash flow

Maturity/Call Date

1 month – 10 years

Weighted average coupon

2.97% - 3.08% (3.03%)

Marketability yield
adjustment

1.0% - 2.0% (1.6%)

Fair Value of Financial Instruments

The following tables present estimated fair values of the Company’s financial instruments and the level within the fair value hierarchy in which the fair value measurements fall at March 31, 2023 and June 30, 2022.


	Carrying Amount		Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
March 31, 2023:
Financial assets
Cash and cash equivalents	$	9,465	$	9,465	$	—	$	—
Interest-bearing time deposits in banks		1,250		1,250		—		—
Loans, net of allowance for loan losses		578,511		—		—		555,882
Federal Home Loan Bank stock		3,843		—		3,843		—
Accrued interest receivable		2,641		—		2,641		—

Financial liabilities
Deposits		691,568		—		404,660		284,542
Repurchase agreements		10,764		—		10,764		—
Federal Home Loan Bank advances		56,500		—		56,360		—
Advances from borrowers for taxes and insurance		1,352		—		1,352		—
Accrued interest payable		961		—		961		—
Unrecognized financial instruments (net of contract amount)
Commitments to originate loans		—		—		—		—


	Carrying Amount		Fair Value Measurements Using Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 30, 2022:
Financial assets
Cash and cash equivalents	$	75,811	$	75,811	$	—	$	—
Interest-bearing time deposits in banks		1,500		1,500		—		—
Loans, net of allowance for loan losses		518,931		—		—		512,643
Federal Home Loan Bank stock		3,142		—		3,142		—
Accrued interest receivable		2,023		—		2,023		—

Financial liabilities
Deposits		752,020		—		501,544		250,650
Repurchase agreements		9,244		—		9,244		—
Federal Home Loan Bank advances		15,000		—		14,903		—

Advances from borrowers for taxes and insurance		503		—		503		—
Accrued interest payable		176		—		176		—
Unrecognized financial instruments (net of contract amount)
Commitments to originate loans		—		—		—		—

In accordance with the Company’s adoption of ASU

2016-01

as of July 1, 2018, the methods utilized to measure the fair value of financial instruments at March 31, 2023, represent an approximation of exit price; however, an actual exit price may differ.